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Fee-for-service versus capitation-based reimbursement: how the payment method affects utilization of
1University of Wisconsin Medical School, Cardiovascular Disease Section, Milwaukee Heart Institute of Sinai Samaritan Medical Center 53233, USA.
Insights
Capitation reimbursement for echocardiographic services led to increased utilization, with younger, female patients referred for less severe conditions. This suggests a need for improved screening in cardiology referrals.
Area of Science:
- Cardiology
- Health Economics
- Medical Reimbursement
Background:
- Historically, fee-for-service reimbursement for echocardiography by health insurance carriers (HIC) was standard.
- Managed care models introduce capitation as an alternative reimbursement method for HIC.
Purpose of the Study:
- To investigate if reimbursement methods (capitation vs. fee-for-service) influence patient selection for echocardiographic services.
- To analyze patient characteristics, referral reasons, and echocardiographic outcomes based on reimbursement models.
Main Methods:
- A two-phase retrospective study involving ambulatory patients.
- Phase One: Compared patient characteristics, referral reasons, and echocardiographic results between capitation (Group A) and fee-for-service (Group B) reimbursement models.
- Phase Two: Assessed repeat echocardiogram referral rates and normalcy rates within two years for both groups.
Main Results:
- The capitation group (Group A) comprised younger, predominantly female patients with more benign referral reasons.
- Capitation patients showed less severe echocardiographic diagnoses, higher rates of normalcy, and higher repeat normalcy rates.
- Capitation reimbursement was associated with more liberal utilization of echocardiographic services.
Conclusions:
- The capitation reimbursement model in this region facilitated broader access to echocardiography.
- Findings highlight the potential for increased utilization under capitation, emphasizing the need for enhanced patient screening.
- Cost-conscious healthcare environments require careful evaluation of referral patterns in echocardiography.
Abstract:
Historically, health insurance carriers (HIC) have reimbursed physicians on a fee-for-service basis for echocardiographic studies. With the emergence of managed care, the HIC now may have the option of paying on a capitation basis. To determine whether the method of reimbursement had any bearing on the types of patients referred for echocardiographic services, we conducted a two-phase (retrospective) study. In Phase One, we assessed two groups of ambulatory patients with regard to patient characteristics, medical reason for referral, and echocardiographic results. Group A (4,066 patients) had insurance plans that stipulated reimbursement for echocardiographic services as part of capitation for cardiology services. Group B (3,061 patients) had plans that reimbursed for echocardiographic services on a fee-for-service basis. In Phase Two, we assessed a total of 5,947 patients (3,833 from Group A and 2,114 from Group B) over a period of 40 months to determine the frequency of referral for a second echocardiogram within 2 years of a normal one and the repeat normalcy rate. The results showed that the capitation reimbursement group included younger, predominantly female patients who were referred more often for a more benign reason and who more frequently were diagnosed echocardiographically with less severe disease, higher rates of normalcy, and repeat normalcy. These findings suggest that in our geographic area the capitation method of reimbursement permitted more liberal utilization of echocardiographic services. In this era of cost awareness, the study suggests the need for better screening of patients referred for echocardiographic services.